Zerodha’s Nithin Kamath offers a way out for investors in India’s falling market: Stay invested in SIPs

As sell-off continues in Indian stock market, systematic investment plans (SIPs) are experiencing sharp decline, reflecting cautious investor sentiment in the current fragile market conditions. Avoiding emotional investment decisions is crucial at this juncture and investors should not panic or stop their SIPs, suggests Zerodha's co-founder Nithin Kamath.

In a note on social media platform X, Kamath said that data shows that the number of investors stopping their SIPs has gone up. “This is the wrong thing to do. What an SIP helps you do is to average your investments across different market cycles.”

A systematic investment plan (SIP) is a popular way to invest in mutual funds on a regular basis, helping investors to build wealth over time by reducing risks and averaging market highs and lows. However, SIP returns in most equity mutual funds have recently become negative, indicating a loss for investors due to a downturn in the stock market. As a result, some retail investors have stopped SIPs to avoid potential losses. The equity benchmark Sensex and Nifty are down up to 20% from their September highs, while mid and small cap indices have corrected up to 25% amid valuation concerns.

Should you stay invested in SIP?

According to Kamath, this is the first real market correction for retail investors who started investing after the Covid-19 pandemic. Markets are cyclical, and given the way it went up from late 2020, this fall was inevitable. However, if one invests regularly in the right funds, diversify, and stay disciplined, their chances of long-term success are high, he said.

“You averaged on your way up from 2021; now, you get to average on the way down. In 2020, large, mid, and small caps fell by 25-40% but then rose by 200-400%. If you had panicked, you would have missed the rebound,” Kamath explained.

He also pointed that the other mistake to avoid is “leverage”. “There's no shortage of businesses triggering you to borrow money to invest etc., but that's a bad idea. I've no idea where the markets go from here, and neither does anyone. What I do know is panicking now is the wrong thing to do, and you can get pushed to panic if you have borrowed.”

“You are better off just investing every month and doing something useful in life than getting carried away by the doom and gloom,” he added.

Last week, Zerodha co-founder raised concerns about the impact of market correction on the broking industry. “[The broking industry is] seeing a massive drop in terms of both the number of traders and volumes,” Nikhil Kamath’s brother Nithin Kamath wrote in a post on X on February 28.

“The markets are finally correcting. Given that markets swing between extremes, they can fall more just like they rose to the peak. We are seeing a massive drop in terms of both the number of traders and volumes. Across brokers, there's a more than 30% drop in activity. Combined with the true-to-market circular, we are seeing degrowth in the business for the first time since we started 15 years ago,” he added.

Market in consolidation phase

According to analysts, the equity market will continue to consolidate, triggered by sustained foreign fund outflows, weak corporate earnings, and mounting economic uncertainty amid U.S. tariff concerns.

If benchmark Nifty break below 22,000 level may trigger a “deeper correction” and the next major support stands at 21,500, said Dhupesh Dhameja, Derivatives Analyst, SAMCO Securities.

Echoing the same, Rupak De, Senior Technical Analyst at LKP Securities, said Nifty is expected to find support around 21,800-22,000 level in the near term. “A sustained move above 21,800 could lead to a significant recovery, while failure to hold this level may trigger another sharp decline."

The continued sell-off in Indian equity market has wiped out a staggering ₹94 lakh lakh crore from investor wealth in the last five months, with Sensex and Nifty plummeting up to 16% from their life-time highs touched in September 2024. In the calendar year 2025, the BSE Sensex and NSE Nifty have lost up to 7%, erasing ₹62 lakh crore of investor wealth. The market capitalisation of BSE-listed companies slipped to ₹384 lakh crore at the close on trade on February 28, from September's record high of ₹478 lakh crore.

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